International Trade Essays - Economy Of Hong Kong,

International Trade Introductuion Hong Kong, the pearl of Asia has been the center of trade and finance in Asia since the early 20th century. In a short history of about 150 years, Hong Kong has become the source of growth for many nearby economies. In a certain sense, it can be even said that it is a merchant city founded and managed by businessmen. Traditional hongs or trade houses of Hong Kong were the pillar of the economy. Jardine Matheson and Hutchison were major hongs that led the economy and the Hong Kong & Shanghi Bank were the financier of these hongs and has today grown to become one of the largest bank in the world. These firms were the critical factors of the growth for Hong Kong's economy. Their role however has changed overtime. They are no longer the de facto leaders of Hong Kong as they were in the mid 1800's. Their role has diminished as Hong Kong grew to become more international, and the 1997 handover to the People's Republic of China has further altered their position. Some hongs that adapted well to the changing times prospered while others either went bankrupt or become stagnant. Background on Hong Kong Economy The territory of Hong Kong is located at the mouth of the Pearl River, a little southwest of the Guangdong Province of the PRC. Hong Kong was ceded to the British after the Opium War in 1842. Many believe that the British hongs were behind lobbying the British government into fighting the Chinese Government and the settlement of the island. Kowloon was annexed in 1860, and the New territories were leased for 99 years in 1898. In 1984, the British and the PRC government agreed that Hong Kong as a whole would return to Chinese soverienty in 1997. However, a system of one country two systems were also agreed upon where Hong Kong would retain its status as a free port, with it's laws remaining unchanged for 50 years. It's main emphasis is to preserve Hong Kong's laws and economic freedom, thus to enhance the position of Hong Kong as a economic center. The Large British owned hongs were originally trade and warehouse companies established by the British in the early days of Hong Kong colonialism, they have since grown in to major commerical conglomerates. They hold interest in cargo handling, manufacturing, real estate, and even retailing. They are the engine of the Hong Kong economy. Since Britain took over the port city in 1842 to use as a gateway to the Chinese markets, the business of Hong Kong had been business, and the power was held by the hongs. The first traditional hong was the Jardine Matheson. It was once seen to be more influential than the colonial government but nowadays it has become a minor player compared to Li Ka Shing's Hutchision Whampoa. Li Ka Shing, the Chairman or Taipan of Hutchision Whampoa, became the first Chinese to own a traditional hong. Li's drive and business ability helped foster Hutchision into a global conglomerate. Hong Kong Bank grew from a small trader's bank into one of the Top ten banks in the world today. Jardine Matheson Jardine, Matheson & Co. was founded by 2 Scottish merchants, William Jardine and James Matheson in Guangdong in 1832. It was an opium trader that were the pioneers into the China trade. Eventually James Matheson takes control from 1836. It played a key role in the founding of Hong Kong and became the first to purchase land from the colonial government in 1842. Jardine expanded into other trade products in other Asian countries like Japan and South East Asian countries and also enters the ship/cargo handling industry and the real estate business. After World War II, Jardine moved their head office from Shanghi back to Hong Kong and it offically goes public in the Hong Kong Stock Exchange in 1961. The 1970's saw Jardine forming many ventures and aquisitions such as the joint venture with the Robert Fleming of UK to create the Jardine Fleming & Co., a holding company the aquires many foreign and local firms and diversifies Jardine's business. The mid- 1980's saw some mismanagments and misguided aquisition especially after the 1984 Sino-British announcement on the